NAIROBI, Nov. 22 – Kenya has embarked on harnessing huge geothermal potential that exists in the country by convening a key conference to woo investors to participate in geothermal prospecting.
Kenya’s geothermal potential is estimated at between 7,000 MW and 10,000 MW but it only has an installed capacity of 202 MW.
This state of affairs is what has prompted the government to aggressively search for ways to tap this potential by fast tracking ongoing projects and committing to new ones, given the fact that the country is energy deficient in the face of a 12 percent annual power demand.
The East African Rift Valley system is estimated to hold the potential of produce 7,000 MW of electricity, with Kenya accounting for 1,200 MW, which is equivalent to the power the country produces annually. Present geothermal prospects are at Olkaria, Menengai and Eburru but only about 202 MW have so far been developed in Olkaria.
This consists of KenGen (150MW) at Olkaria I and II, Power IV (48 MW) and some four megawatt by Oserian Development Company, a flower firm for own use. To enable Kenya tap investments in this sector, Nairobi is hosting a two-day conference since Monday which seeks to mobilize private international finance and multilateral finance and restructuring to raise budgetary resources required for harnessing the untapped 7,000 MW potential in the country.
“We want to explore cheaper sources of electricity. Geothermal power production is less costly compared with thermal, hydro or even wind,” KenGen Eddy Njoroge Managing Director says. “The challenge we have is raising the funds for constructing the geothermal plants and that is why we need international financiers to partner with us.”
According to Njoroge, in the next five years alone, KenGen will require at least 4.5 billion U.S. dollars to implement projects with the capacity to generate 1 200 MW from geothermal wells in the Olkaria and Menengai fields in the Rift Valley. Njoroge says with energy demand in Kenya expected to increase at an average of 8% a year, only massive investments in geothermal will end Kenya’s chronic power shortages.
“We need 4,000 MW between now and 2030. We want to look at all the options for financing these developments,” Njoroge said on the sidelines of a geothermal conference in Nairobi. Energy policymakers are keen to attract investment in the country’s extensive geothermal resources in order to reduce reliance on hydroelectric power and provide clean energy.
Energy Minister Kiraitu Murungi reveals that the government has already signed an agreement with a consortium of companies from China, Korea and Japan for the commencement of the fourth phase of Olkaria geothermal project in 2013. “GDC (Geothermal Development Corporation) is currently undertaking exploratory drilling for the first phase development of 400 MW with a commissioning target of 2016. The long term plan is to fully develop the prospect in four phases of 400 MW each,” Murungi told the two-day conference underway in Nairobi. The ministry disclosed that it has already worked out the steam costs.
“Steam so produced will be offered for sale to both KenGen and IPPs (Independent Power Producer) for conversion into electricity at a price of 35 US cents per KWh,” the minister said. “We have developed proposals for financing of the sector by the energy ministry and the Treasury. More funding is needed to open up the Bogoria and Silale areas.” GDC is also going to undertake steam field exploratory, appraisal and production drilling in the Bogoria-Silali Block which has been shown to have a potential of about 3,000 MW.
The minister appealed to the international community and other donors to assist the country in exploiting the energy in other parts of the country, such as Menengai, and Longonot. Murungi said the government is in the process of reviewing Sessional paper No. 4 to align it with the requirements of the new constitution on clean energy.
The government’s commitment also attracts other organizations such as development partners whose involvement helps to lower the risk profile of the projects and allows the contractors to focus on their day-to-day operations. Besides the down-payments however, there exists other financing options such as “Build-Operate- Transfer”, vendor financing and the Public Private Partnerships for the massive programs.
The policymakers say some ambitious projects have been lined up that could see an injection of an additional 21,620 MW over the next two decades with geothermal providing about 5,000 MW. In addition, several detailed studies are periodically been carried out to determine the viability of various projects.
It is these surveys for instance that indicated the existence of a geothermal resource potential of about 1,600 MW that can be commercially exploited under the Menengai caldera. Vice-President Kalonzo Musyoka who opened the conference called on East African region to come up with ways of accelerating the exploitation of its vast potential for geothermal energy as a key driver to development.
Musyoka described geothermal energy as a secure, environmentally-friendly and reliable source of power that the region was yet to fully harness despite having enormous potential for it, and called for a paradigm shift. “The potential held in the yet-to-be-harnessed geothermal resources in the East African region is immense. Kenya’s potential, for instance, is estimated at between 7,000 and 10,000 MW out of which only 202 MW has been exploited around Olkaria in the Great Rift Valley. Time has come for us to think out of the box,” Musyoka said.
He noted that global warming and adverse climatic conditions, had rendered the hitherto over used hydro-generated power in the region unreliable and expensive to use. “Global warming and climate change pose a serious setback to electricity generation. Hydro power sources have been negatively affected by the inconsistencies and excesses that climate change brings along, making it difficult to rely on this hitherto predominant source of energy in a region whose rivers are generally small compared to other parts of the world,” he said.
Musyoka called for the establishment of systematic public and private sector partnership in the exploration and harnessing of geothermal energy in the region. The conference brings together participants from across the world who include suppliers, scientists, engineers, financiers and other key players in the geothermal sector to share experiences and chart the way forward for the sector. (Xinhua)
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